Enterprise Products Partners LP and Duncan Energy Partners LP said last week their Acadian Gas LLC subsidiary will extend its Louisiana intrastate pipeline into northwest Louisiana to give Haynesville Shale producers expanded access to markets via Acadian's existing 1,000-mile system in South Louisiana and connections to nine major interstate pipelines.
Known as the Haynesville Extension, the project is intended to transport up to 1.4 Bcf/d from the Haynesville area through a 249-mile, 36-inch diameter and 30-inch diameter pipeline that will connect to Acadian's existing system as well as its affiliated Cypress Gas Pipeline. The pipeline is expected to be in service in September 2011.
"By leveraging our existing Acadian system, we will be able to provide Haynesville producers with much-needed takeaway capacity in a timely manner. In addition, we believe the Haynesville Extension will give shippers more flexibility and market access to manage and maximize the value of their production," said Richard H. Bachmann, CEO of the general partner of Duncan Energy Partners.
The existing Acadian system has access to more than 150 end-use markets along the Mississippi River corridor between Baton Rouge and New Orleans, LA, includes a rapid-cycle salt dome storage cavern, and has the ability to make physical deliveries into the Henry Hub, the companies said. The Haynesville Extension would have two interconnects to the existing Acadian system in Pointe Coupee and Assumption parishes, LA, and would have two interconnections to the Cypress system in Pointe Coupee and West Baton Rouge parishes, LA.
The project would also have interconnects with Florida Gas Transmission, Texas Eastern Transmission, Transco, Sonat, Columbia Gulf, Trunkline, ANR, Tennessee Gas Pipeline and Texas Gas Transmission. Together with the capacity into the existing Acadian systems, the extension would provide about 5.5 Bcf/d of meter capacity into an estimated 12 Bcf/d of available downstream pipeline takeaway capacity.
Initially the project would connect to nine Haynesville Shale producer locations in DeSoto and Red River parishes. Acadian expects to construct two compressor stations with approximately 67,000 combined horsepower, the companies said.
The new pipeline should give shippers the opportunity to benefit from more favorable pricing points and diverse service options and access to the South Louisiana marketplace, the companies said.
During a conference call with financial analysts to discuss Enterprise third quarter earnings, Christopher R. Skoog, senior vice president, emphasized the diversity of shippers on the project.
"I will tell you we have signed up seven different parties, so we don't really have 'a' anchor shipper, which is really unique about a project of this type," he said. "We have seven different parties, the lowest one being 100 MMcf/d. I won't get into what the high end is...We're tying to nine different producer locations, so what we feel very comfortable with is the diversity of the producer base, the diversity of credit risk, and we don't have the one 900-pound gorilla driving this project. This is a nice project that producers really wanted to drive home.
"All the agreements are 10-year agreements, and some have options to extend beyond 10 years." Skoog added that the contracts are made up almost entirely by firm reservation fees.
"Enterprise's integrated midstream system already touches over 10 Bcf/d of natural gas, or approximately 17% of U.S. demand," said Enterprise CEO Michael A. Creel. "The expansion of the Acadian system provides our partnership with another major foothold in a significant nonconventional natural gas producing area. In addition to the Haynesville, we have major midstream positions in the Jonah/Pinedale, Piceance, Barnett, Eagle Ford and Marcellus regions."
The Haynesville Shale covers about two million acres in Northwest Louisiana, almost all of which is under lease. Production from the approximately 200 wells drilled to date is estimated at more than 1 Bcf/d, according to the Enterprise and Duncan. There are 400 locations in various stages of drilling and completion with 150 rigs working in the region.
Acadian Gas is 66% owned by Duncan Energy Partners and 34% owned by Enterprise. Enterprise is the parent of Duncan. Last week Enterprise and TEPPCO Partners LP announced that they had completed their merger, making Enterprise the nation's largest publicly traded partnership with an enterprise value of approximately $30 billion, 48,000 miles of pipelines and market capitalization of $18 billion. The deal was announced in June (see NGI, July 6). TEPPCO is now a wholly owned subsidiary of Enterprise. Common units of Enterprise will continue to be traded on the New York Stock Exchange (NYSE) under the ticker symbol EPD. TEPPCO units, which had been trading on the NYSE under the ticker symbol TPP, will be delisted.
Enterprise net income for the third quarter was $213 million (36 cents/unit), compared with $203 million (38 cents) for the year-ago period, the company announced last Wednesday. The number of limited partner units outstanding was about 6% greater in the third quarter than the year-ago period. Revenue for the third quarter decreased to $4.6 billion from $6.3 billion in the same quarter of 2008, primarily due to lower commodity prices in the third quarter of 2009.
"NGL [natural gas liquids], crude oil and petrochemical pipeline volumes were a record 2.5 million b/d, while NGL fractionation and butane isomerization volumes were a record 453,000 and 104,000 b/d, respectively. Our natural gas pipeline systems continued to run at near-record levels of 9.6 trillion Btu/d, driven by volume growth and strong natural gas processing margins," said Creel. "With few exceptions, we continue to experience volume growth on our major natural gas pipelines. As an example, our Piceance Basin pipeline system had record throughput of 1.1 trillion Btu/d during the third quarter of 2009."
Total onshore gas pipeline volumes increased 9% to 8.2 trillion Btu/d for the third quarter of 2009 versus 7.6 trillion Btu/d for the same quarter of 2008. The largest volume gains were on the White River Hub, Piceance, Acadian and Jonah systems. Offshore natural gas pipeline volumes were 1.4 trillion Btu/d in the third quarter of 2009 compared to 1.2 trillion Btu/d in the third quarter of last year.
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